Saudi Arabia's Shift: Embracing Low Oil Prices?

Saudi Arabia signals a policy shift by communicating its readiness to endure prolonged low oil prices without further output cuts. The kingdom aims to preserve market share even as it confronts fellow OPEC+ members surpassing targets. This decision reflects strategic adjustments amid economic pressures and evolving geopolitical dynamics.

Saudi Arabia is shifting its oil strategy and signaling resilience to prolonged low prices, a move communicated through briefings with allies and industry experts, sources revealed. This shift hints at the kingdom's willingness to expand its market share after years of stabilizing the market with output cuts as part of the OPEC+ agreement.

This new approach comes as Saudi Arabia grows frustrated with countries like Kazakhstan and Iraq exceeding their OPEC+ production targets. With oil prices falling below $60 a barrel due to recent output hikes, Saudi Arabia is preparing to balance its budget by potentially raising borrowing and reducing costs, given its need for oil prices above $90 to sustain government expenses.

While the Saudis gear up for lower oil prices, aligning with market share expansion over price control, Russia remains cautious, preferring slower output increases. The OPEC+ coalition, having agreed on significant output hikes, is navigating internal disagreements and broader geopolitical influences as it manages production levels.

(With inputs from agencies.)